Hanging Man Pattern Indicator

Hanging Man Description.

The overall concept of the hanging man candlestick is a bearish pattern. Even the bullish hanging man is bearish, but is deemed a weaker signal than the bearish hanging man. The pattern looks very much like a hammer, with a small shadow or body at the top of a long wick. The bearish hanging man candlestick opens at the high of the day, and proceeds to fall during the session. At some point it reverses but never quite reaches the open price, and closes just below the open. Those who watch this pattern need to keep an eye on their stocks over the coming days to see if the price starts to fall, thus confirming the pattern.

More About This Pattern

As you can see on the chart example, this stock gapped up with a higher open than the previous days close. During the trading session the price fell, to a low which reversed but could not find the strength to close positive.

Over the next few sessions the price fell rapidly, and confirmed the bearish hanging man candlestick was indeed worth watching.